Business supported the EEC initiatives

11/14/2017

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Project Office for the Implementation of Digital
Initiatives, headed by the Chairman of the Board of the Eurasian Economic
Commission (EEC) Tigran Sargsyan will be launched before the end of this year. This was announced at the session of the Advisory Council for Cooperation of
the EEC and the Business Council of the Eurasian Economic Union (EAEU). The
session of the Council was attended by members of the EEC Board headed by the
Chairman of the EEC Board Tigran Sargsyan, the President of the Business
Council of the EAEU Victor Khristenko and heads of business associations of the
Union countries, representatives of large and small businesses of the EAEU Member
States.

In addition to
topics related to digital transformation of the economies of the Union
countries, harmonization of excise taxes on tobacco and alcohol products,
removing barriers and obstacles to the implementation of integration projects
in the industrial and agricultural sectors, development of Eurasian
technological platforms, creation of Eurasian brands, as well as changes to the
Rules of origin of goods imported from third countries were discussed.

The Chairman of
the EEC Board Tigran Sargsyan noted that the EEC Ministers, members of the
Business Council of the EAEU and business community representatives “discussed a
number of key issues, without which it is impossible to further deepen the
integration of the Union countries.” First of all, these are the prospects of
the digital transformation of economies in the Eurasian Economic Union.
According to Tigran Sargsyan, “it is impossible to imagine the modern
integration association without a common digital agenda. The agreed policy in
this area is one of the key factors to achieve success and avoid the emergence
of new technological barriers already.”

According to the
President of the Business Council of the EAEU Victor Khristenko, “the figure and the
opportunities it offers completely change the nature of our activities both in
the economy and in other spheres of life. This is a new image of the world
around us. Digital transformation begins to affect the fundamentals of the
Eurasian Union, how integration projects, allowing increasing their
effectiveness, are being implemented”.

In
his speech, Tigran Sargsyan formulated the basic approaches to the
implementation of initiatives under the digital agenda of the EAEU
and informed the participants of the session that a project office will be
created before the end of the year. It will consist of five persons with
experience of working with projects in the field of digital technologies - one
representative from each EAEU Member State. The key task of the office is to
evaluate the prospects of varied initiatives, identify their integration
potential, and ensure their implementation. According to the Chairman of the
EEC Board, the acutest, but at the same time the most difficult will be
initiatives aimed at introducing the concept of traceability of goods and
services, as well as their labelling and identification.

The EEC has
already started receiving applications and proposals from the Union countries,
said Tigran Sargsyan. For example, Armenia presented an initiative to develop
and implement a unified system of electronic invoices, which will reduce the
number of documents to be provided to tax authorities and the time for their
registration.

Proposals by the Armenian side are particularly
relevant for those cases when goods need to be transported through the
territory of third countries outside the EAEU.

Speaking about principles and mechanisms for formation
of agreed policies in the field of digital programs, Tigran Sargsyan proposed
an algorithm envisaging mutual notification and a possibility of accession of
countries to certain projects. In particular, the initiating country informs
its partners of planned initiatives, and during a certain period of time other
Union States can join these projects. Moreover, this procedure minimizes risks
of new technological barriers for free movement of goods and services. The
Chairman of the EEC Board stressed that this idea had been supported by Prime
Ministers of the Union countries at the session of the Eurasian
Intergovernmental Council (EIC) on October 25 this year.

The President of the Russian Council of Industrialists
and Entrepreneurs (RCIE) Alexander Shokhin noted that a Committee on Digital
Transformation will be created in the RCIE in the nearest future. The
participants of the discussion noted the importance of an active dialogue with
society and inclusion of all the active supporters of digitalization in joint
projects.

Removing barriers in the common economic space of the
Union and the role of the business community is
another important topic of the past session. Karine Minasyan, the EEC Board
Member - Minister in charge of Internal Markets, Information Support,
Information and Communication Technologies, said that the elimination of barriers
in the domestic market of the Union is one of the priority tasks of the
Commission. “We have recorded 198
barriers in your register. Those are barriers, limitations and exceptions, and
we are working on each of them,” Karine Minasyan said. In the first place,
efforts are taken to eliminate barriers, that is obstacles violating the law of
the EAEU. As noted by the EEC Minister, 20 barriers are now being worked on, 15
of which have already been eliminated.

Another important
result was the preparation of the “White book” that describes 60 barriers
agreed by all Member States that have the greatest deterrent effect on the free
movement of goods, services, capital and labor in the domestic market of the
Union. According to Karine Minasyan, road
maps for their elimination are being developed that envisage specific events
and deadlines. On October 25, the “road map”
for 2018-2019 was adopted at the session of the EIC in Yerevan that includes 17
barriers and a number of practical measures to eliminate them.

Members of the Business Council of the EAEU and
business representatives discussed the EEC proposals on approving new Rules of
origin for goods imported from third countries.
As noted by the EEC Minister in charge of trade Veronika Nikishina, update of
the existing rules is provided for by the Treaty on the Eurasian Economic Union
and become particularly relevant in connection with the entry into force of the
new Customs Code of the EAEU at the beginning of 2018. In particular, the EEC
Minister drew attention of the participants to the introduction of the concept
of “residual origin criteria”. They will allow determining the country of
origin of imported goods in difficult situations and avoiding possible
additional customs fees for foreign trade operators.

Veronika Nikishina said that in a situation where
goods are produced in one country from components manufactured in another
country or countries, it is recommended to use the basic criterion - change of
tariff classification. At that, the sufficient level of processing may be
considered a change in tariff classification of imported goods at the level of
the first four digits of the CN of FEA. In case of no change, the country of
origin becomes “unknown” for the purposes of the Customs regulation of the
Union.

This legal uncertainty can lead to negative
consequences after the entry into force of the new Customs Code of the EAEU.
With regards to bona fide suppliers of goods with “unknown” country of origin,
non-tariff measures or anti-dumping duties could be applied on the basis of
Article 314, established for similar goods. As a result, importers and consumers
of such goods may bear additional costs due to the imperfection of the
legislation.

According to the EEC, the best way out of this
situation will be the introduction of “residual origin criteria” that would
allow avoiding additional burden. The main purpose of using the “residual
origin criteria” is to ensure a possibility to determine and declare the actual
country of origin of the goods, if the main criterion is not met. In this case,
the principle of the biggest cost of components or the definition of the origin
country of the raw material can be used, even if technological operations at the
enterprise of an end manufacturer do not lead to the change of the first four
characters of the CN of FEA (packing or packaging, final product processing,
etc.).

The EEC is confident that it will not complicate the
existing procedure for the confirmation of the origin of goods. Importers will
still be able to choose an acceptable option, either provision of a declaration
of origin of the goods or a certificate of origin of the goods. “This approach
is in line with the best international practices,” the EEC Minister noted.

Another important topic of the discussion was
harmonization of excise taxes on alcohol and tobacco products.
The EEC Board Member - Minister in charge of Economy and Financial Policy Timur
Zhaksylykov said that at present, there has been considerable variation in the
rates of excise taxes among the Union countries on spirits (from 2.2 euro to
7.7 euro per 1 l of ethyl alcohol) and tobacco products (from 11.6 euro to 31.3
euro per 1,000 cigarettes). According to the EEC Minister, the best way to
tackle the task would be a definition of the corridor of excise taxes,
including an indicative rate of the excise tax and a tolerance range for each
of the Union countries. This will allow considering the difference in the
social and economic development of the Union countries and income of the
population, as well as providing predictability of the EEC and the EAEU Member
States actions for business. According to Timur Zhaksylykov, other options,
including a dramatic increase of excise taxes, could lead to a price shock and
the growth of illegal volumes of tobacco and alcoholic products in a number of
the Union countries.

Business
representatives supported the Commission's position on this issue. “Today we have
discussed this hot topic, and business is still inclined to think that the
agreement on alcohol market should move towards harmonization of excise
policies with a clear corridor of possible differences between the tax rates of
the respective national markets, as well as with a clear adjustable corridor
and with an understandable perspective,” the President of the Business Council
of the EAEU Viktor Khristenko explained.

The EEC Board Member - Minister in charge of Industry
and Agroindustrial Complex Sergey Sidorskiy spoke on the assessment of the most
promising cooperative projects in the real sector of the economy. In his
opinion, the creation of an orbital space constellation of the Union countries’
satellites run by the single operator of the EAEU can be considered the most
worked-through project.

Moreover, a project for the creation of the modern
high-efficiency combine harvester that uses electronic technologies for
monitoring and control is now under consideration. The implementation of this
project will allow developing new competences and technologies in agricultural
engineering, as well as increasing the efficiency of agriculture. “The
cooperative effect of the implementation of this project is rather evident. It
includes innovation activity of enterprises, usage of capacities, new jobs,
approaching the strategy “Industry 4.0”, significant growth in related
industries,” Sergey Sidorskiy assured. Development and manufacture in the EAEU
of innovative electric traction vehicles and vehicles with unmanned driving is
under consideration.

The EEC Minister noted that companies in Armenia,
Belarus, Kazakhstan, and Russia are ready to implement the project for the
creation of the Eurasian lighting holding. “The Subject of the program is very
interesting: the transition from light bulbs to LEDs and the creation of
lighting products of the Union,” Sergey Sidorskiy said. Moreover, he noted that
the implementation of the idea of Eurasian technological platforms allowed us
to begin the development of initiatives in the field of biotechnologies,
photonics, and medicine.

The idea of
creating a vertically integrated jewellery holding in the EAEU could also be
considered a promising project. The Union countries have developed the
industrial base represented by more than 120 major enterprises.

According to the results of
2016, the volume of jewellery from precious metals imported to the EAEU Member
States was more than twice as much as the volume of exports, and jewellery made
of precious and semiprecious stones - by ten times more. Whereas the absence of
cooperative interaction of industrial complexes withholds the possibilities for
their further development in the context of global competition. Consolidating
efforts in the jewellery industry would contribute to the loading of
enterprises capacities and strengthening positions of Eurasian manufacturers on
the market. Work on the creation of such a holding can be based on a
specialized Eurasian technological platform.